What’s your take on 2021? Are you feeling beaten up by another year of a seemingly endless pandemic? Annoyed by the rising costs of gas, groceries, and other goods? Frustrated by rental costs, or by trying to house hunt amid scary-high prices?
It’s true, there’s plenty to gripe about as we reflect on 2021. But if we look under the economic hood, it was actually a pretty positive year here in the U.S. Consider these stats:
Jobs: The U.S. job market is rebounding quickly. The nationwide unemployment rate is at 4.2%, down from a pandemic high of 14.8%, and closing in on the pre-pandemic low of 3.5%. Ending December 4th, weekly jobless claims were at their lowest since 1969.
Wages: According to the U.S. Bureau of Labor Statistics, the average American worker wage and weekly earnings hit an all-time high in November 2021, up almost 5% from November 2020.
Stocks: As I draft this article, with five trading days left in 2021, the U.S. stock market was up 21% year-to-date. Coincidentally it was also up 21% in 2020. That’s good news for workers’ retirement nest eggs.
Cash: Many of us have never had so much cash in hand. The M1 money supply is a measure of how much spending money the U.S. collectively has in currency, checking accounts, and similar cash reserves. At the end of October, the M1 was at eye-popping record levels, with collectively over $20 trillion burning holes in peoples’ and businesses’ pockets. To put that in perspective, the M1 was already at a record $4.3 trillion in March 2020, pre-pandemic. Only two months later, it was over $16 trillion thanks to the U.S. Congress and Federal Reserve pumping trillions of dollars into the U.S. economy.
What’s up for 2022 economically? No promises but I hope to see a more normal inflation rate. In my opinion, this will require a few things to go right: The U.S. government will have to siphon off some of the excess M1 cash by raising interest rates, taxes, or both. We’ll need to resolve our manufacturer and wholesaler supply chain issues. And U.S. and OPEC oil companies will need to increase their output.
I hope 2022 treats you and yours well.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
John A. Frisch, CPA/PFS, CFP®, AIF®, PPC™ founded Alliant Wealth Advisors in 1995 and has over 30 years of experience as a financial professional. In his free time, he’s an avid long-distance runner, a sport that requires discipline, patience and vision. John applies these same skills to his professional pursuits: He helps families and retirement plan sponsors adopt a patient, disciplined approach to overcoming financial challenges and reaching their distant goals along a clear path. Learn more at www.alliantwealth.com or to read past articles, visit www.alliantwealth.com/blog.
